Answer to Question #336203 in Marketing for yekatit

Question

DKT Ethiopia demands to set the price for its newly produced Hiwot Trust condoms. The estimated fixed cost is 200,000birr with total variable cost of 50,000 birr. The company estimates to have a sale of 50,000 Hiwot Trust condoms with 30% return on its 400,000 birr investment.

a.   What price should the company charge for its Hiwot Trust condoms, if the company decides to use Investment return pricing?

b.   Compute the break-even volume

c.   What will be the price for the Hiwot Trust condoms if the company decides to use markup pricing instead of target return pricing with 20% markup on sales?